‘Informal business driving inflation’
THE Zimbabwe National Chamber of Commerce (ZNCC) has singled out some unregistered small to medium businesses as the major drivers of basic commodities’ price hikes due to lack of discipline in the sector.
There was a wave of price hikes last October and since then, the market has remained volatile.
The Chamber is concerned that informal traders continue to speculate and control the foreign currency black market rates, thereby pushing prices up.
In its recent presentation to Industry, Commerce and Enterprise Development Minister Dr Mike Bimha, ZNCC said the forex dealers are fuelling multi-tier pricing in the informal sector.
“We as the voice of business have noted with disappointment the recent trends which have seen general price levels taking a northward trend in the recent three months, knowing fully well that the official inflation rate in Zimbabwe was recorded at almost 3 percent (2,97 percent) in November of last year.
“An informal sector by nature is characterised by low productivity, moonlighting, lack of discipline and innovation as well as the tendency to profiteer in reaction to policy pronouncements. For instance, an import ban on certain commodities leaves the informal economy with an edge to hoard, creating artificial shortages as we witnessed with cooking oil in recent weeks.
“The dominance of the informal economy means we can no longer rely on official inflation figures since a greater traffic of transacting is now taking place in the underground economy. As long as we have undesignated sites for trading in our urban sites, it is difficult to monitor price levels,” ZNCC said.
The National Competitiveness Commission (NCC) attributed the price increases mainly to the 30 percent to 45 percent forex exchange rates on the informal sector.
The chamber said foreign currency shortages characterised by a multi-tier pricing system meant that the cost of money became both unsustainable and unpredictable.
“As long as we are witnessing the prevailing forex shortages, it means industry’s capacity to satisfy the market will remain weaker whilst credit to the private sector will remain compromised given the high cost of funds following a depreciated RTGS value compared to other payment methods.” The Chamber blasted the profiteering nature of some businesspeople.
“A month ago, parallel market rates were stagnated, especially with the ushering in of a new political dispensation. This leaves us with a conclusion that price increases for the month of December are pure profiteering tendencies by some of our members who are thriving from our Government’s protectionist tendencies and instruments like Statutory Instrument 64 of 2016.
“The festive mood saw a number of players, notably from the retail side, raising their product prices. For instance, what drove the bread prices upwards the past month, if it is not greed? . . . An interaction with millers and wheat farmers has confirmed that there were no major cost shifts of late.”
Meanwhile, Government has committed to set up a special task force to monitor the informal sector as part of efforts to stabilise prices and supply of essential commodities.
The task force committee will specifically focus on informal traders in Harare’s downtown areas.
Dr Bimha said the committee will persuade informal traders to register and use electronic transactions.
“We know the importance of the informal sector in the country, we are well aware of their needs and challenges in transacting electronically.
“We will work out how the plan will be executed to persuade our informal traders to register and use the modern trends of plastic money,” said Minister Bimha.